In Grecoair Inc v Tilling and others – Butterworths Law Direct 6.4.09 there had been a substantial trial in the Commercial Court in which a company which was the underlying insured brought proceedings directly against three reinsurers in respect of damage to an aeroplane which the company owned. The claim was dismissed. The court ordered that the company pay the reinsurers' costs in the action. The costs were not fully assessed, but an interim order of £225,000 was made. The reinsurers only recovered £25,000, which had been ordered by way of security for costs in the course of proceedings
The Commercial Court heard an application by the reinsurers under s 51 of the Supreme Court Act 1981 to enforce the costs order from the trial against the Respondent, whom they alleged had funded the company, and in particular the litigation, had controlled the company, both at the material time and subsequently, to the extent that the company had taken steps to divest itself of any assets it had subsequent to the judgment.
It was held that the court had jurisdiction on a s 51 application to make an order under CPR 32 to hear oral evidence in chief or in cross-examination. The court had to bear in mind three considerations when considering the exercise of its jurisdiction: (i) s 51 proceedings were ancillary proceedings, and should not grow out of control into satellite litigation, (ii) proportionality always had to be considered, (iii) it always had to be borne in mind that the ordinary process under s 51 was a summary process.
There was no doubt in this case that the jurisdiction ought to be exercised. The Respondent would be ordered to give oral evidence in the trial of the application, failing which his witness statement would stand as evidence, in which case the trial judge hearing the application would be at liberty to draw such inferences and accord such weight to it as in all the circumstances he, or she, saw fit to.